This Issue:

Table of Contents

Cover Story

Cover Story - Spanish Version

Mini-Lesson

Comprehension Quiz

Teacher's Guide and Worksheets

Money Troubles

Spanish Translation

By Ritu Upadhyay

In Washington state, long lines form outside food pantries as people wait their turn to choose from shelves packed with donated cans of soup and tuna. Nearly one in every five people in the state has had to depend on charity because they can't afford to buy groceries.

In Florida, soup kitchens that feed the hungry free of charge struggle to keep up with the demand for meals.

In New York City, dozens of unemployed professionals, desperate for work, are in the streets asking people who pass by to hire them.

More and more Americans are in money trouble. On October 23, the Federal Reserve Bank, the main bank of the U.S., announced that the nation continues to suffer from a "sluggish economy." What caused this?

The Bubble Bursts
The U.S. fell into a recession (see "Word Bank," below) in March 2001. Many things contributed to the economic slowdown. The late 1990s were a period of great economic growth. Nearly every worker had a job. Americans were investing more in the stock market (see "The Stock Market," in this issue). Many people grew rich by buying and selling stocks in technology companies, including Internet businesses.

But the bubble began to burst in 2000, when Americans started questioning whether Internet companies were worth as much as people said they were. This was followed by a wave of business scandals. Major companies misled their stockholders and engaged in dishonest behavior. People lost faith in big businesses. The stock market's value fell.

Less to Spend
The survey released by the Federal Reserve Bank last week also shows Americans are spending less money, especially on big purchases like cars. The Funt family of Tampa, Florida, had to cut back on many things when Joshua Funt lost his high-paying job. They put off buying a car and stopped going to restaurants and nearby Disney World. When Jennifer, 11, needed new clothes for school, "I had to stick to a budget," she says.

But the more families cut spending, the more the economy slows down. "Less spending for clothes and cars can lead to fewer orders at factories and workers losing their jobs," says Allen Sanderson, an economist at the University of Chicago.

The poorest in America have been hit especially hard. For the first time in eight years, the number of children in the U.S. living below the poverty line has increased. Eleven-year-old Terrence Taylor's mother has not been able to find a regular job. She had to move her five children into Chicago's public housing, which is in a dangerous neighborhood. "If we had money, we'd move somewhere safer," says Terrence.

Despite the current gloom, economists say that the U.S. will bounce back. The country has suffered much worse periods and recovered. "For the last 50 years, these economic slumps tend to be relatively mild and short," says Sanderson. "We have every reason to be optimistic."

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Word Bank

Economy The way a country manages money and resources to produce things you can buy (called goods) and work done for others (called services).

Recession A period of time when people and companies are spending less and unemployment rises.

Stock Shares, or pieces, of a company that are sold to the public.

Unemployment Rate The percentage of workers who don't have jobs and are actively seeking employment. For example, if 5 out of every 100 workers needs a job, the unemployment rate is 5%.

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